Despite the handover of 10 power companies to private investors, electricity supply remains relatively low in the nation as a result of many challenges. UDEME AKPAN reports on how to confront the problems in order to deliver adequate and sustainable power to consumers.
With the successful handover of the nation’s Electricity Generation Companies, GENCOs and Electricity Distribution Companies, DISCOs, many consumers expected to experience adequate and stable supply of electricity in the nation. The reasons are not farfetched. First, the private investors are known to be good managers. Second, operators in many sectors, especially manufacturing need power to sustain their operations.
But their great expectations may not be realised soon as a result of many challenges that still stare the sector in the face. One of the them is vandalism of infrastructure. For instance, a few weeks ago, electricity supply dropped following the shutdown of Afam power plant. The plant which has an installed 776 megawatts, mw of electricity was shut because of oil theft which culminated in the destruction of the Trans Niger Pipeline, TNP.
The Shell Petroleum Development Company, SPDC Joint Venture which confirmed the development stated that the pipeline was shut as a result of lack of gas. The Corporate Media relations Manager of the firm, Mr. Tony Okonedo stated in a statement that, “The shutdown of the TNP system, comprising the 28inch and 24inch streams resulted in the deferment of 150,000 barrels of oil per day, and also led to tank tops and non-evacuation of condensate from Okoloma Gas Plant which supplies Afam VI Power Plant with feed gas.
He stated that SPDC had to shut down Okoloma Gas Plant today as it could not continue to produce gas without the evacuation of condensate. Okonedo stated that: “Afam VI Power Plant was available at 624MW capacity, but supplying only 105MW to the national grid due to reduced gas volume at the time of shutdown.
Okonedo maintained that the latest leak on the TNP occurred on the 24inch stream at Owokiri on 11 July. A Joint Investigation Visit comprising government agencies, community and civil society representatives and SPDC personnel found that unknown persons had installed a 6inch crude theft valve on the facility.
He stated that the 28inch TNP had earlier been shut in for removal of similar oil theft connections. The company is striving to repair the TNP as quickly as possible, and restore operations that will enable power generation to resume at Afam VI.
Okonedo stated, “SPDC is deeply concerned about the negative impact of incessant crude theft activities on lives and environment in the Niger Delta, and also the loss of electricity to businesses and households across the country. The total daily loss from the TNP shutdown alone comes to about $15 million (N2.4 billion).”
Investigations showed that the pipeline has suffered several attacks in recent times which affected gas supply to the power plant. For instance, a few months ago, SPDC said it might shut its Afam Power Station in Rivers State, as the fire which gutted the Bomu-Bonny Trunk line was still raging. The company stated that the proposed shut of the Afam power plant would cause a drop in the country’s power supply by 650 megawatts.
The firm stated that a vessel used for bunkering went up in flames at the company’s 28-inch TNP which culminated in the shutting down of the Bomu-Bonny Trunk line that produces 150,000 barrels per day. The firm’s Vice-President, Health Safety and Environment, Mr. Tony Attah, gave the indication during a news briefing in Port Harcourt.
He said if the trunk line was not reopened immediately, the Ibom power plant in Akwa Ibom State would be affected and would result in serious gas shortage to power the Afam station, thereby leading to its shutdown. He lamented that large scale crude theft and illegal refining was still going on in the Niger Delta despite the efforts of the Joint Task Force to stem the menace.
Attah expressed surprise how such a sea-going vessel would navigate the waterways undetected. Attah stated that: “This situation is beyond the cause of hunger or poverty. The size of the vessel tells you that it involves a cartel. The challenge of oil theft is becoming too big. I am sure that very strong forces are behind this.
Shell is not alone. A few days ago, the Transmission Company of Nigeria, TCN stated, “There will be about 450MW reduction in electricity generation from today Saturday, 23rd to Tuesday, 26th November, 2013 due to reported vandalism of gas pipeline supplying gas to Okpai power plant in Delta State, resulting in the shutdown of the Power station this evening, and unavoidable power rationing nationwide.
The company’s General Manager (Public Affairs), Mrs. Seun Olagunju stated that TCN is reliably informed that repair work is expected be completed within three days and Okpai power plant will expectedly, resume generation on Wednesday, 27th November, 2013. She added that, “TCN regrets inconveniences to the Federal Government and our highly esteemed electricity consumers nationwide and enjoined members of the public to work with the government in protecting installations and facilities meant for our socio-economic development.
Investigations showed that the maintenance has been completed. An authoritative government report has it that electricity generation has risen from 3,344 megawatts, mw to 3,744.73 mw following the provision of more gas to thermal plants, including AES barge, Aba power plant, Afam 1V, V and V1, Olaoji power plant, Calabar power plant, Egbema power plant, Egbin power plant, Geregu 1 and 2 power plant, Ibom power plant, Ihovbor power plant, Olorunsogo 1 and 2, Okpai power plant, Omoku 1 and 2, Omotosho 1 and II and Sapele have the capacity to generate commercial megawatts, mw of electricity. A top official of the Ministry of power who preferred not to be named said, “The restoration of gas supply to the plant has enabled us to increase electricity generation. He said, “We hope that vandalism would not attack the facility or other pipelines so that the improvement we are noticing can continue.
However, other factors include population explosion, lack of maintenance, low transmission, obsolete equipment lack of meters, haphazard business models and low funding. The managing director of Egbin Power Plc, Engr. Mike Uzoigwe said the nation was generating below its over 4,000 megawatts, mw because of these and other challenges. Uzoigwe said, “The government could not fund mandatory inspections and overhauls of generating plants. Most of our power stations are gas turbines plants. This type runs at speeds beyond 5000RPM and being thousand degrees centigrade temperature.
He said, “If you visit Delta, Sapele or Afam power stations, you will notice several gas turbines lying idle in their filed state. About three of them installed at Ijora power station by Chief Obasanjo’s first regime to supply power to Dodan barracks are also laying waste. Uzoigwe said Kainji Dam Power station which has an installed capacity of 760mw presently has more than nine of its units down on various faults with only 120mw available installed capacity. He said, “Other earlier power stations have been decommissioned and do not produce power anymore. Calabar power station is decommissioned, same as Oji and all later installed power stations at Ijora-Lagos.
Uzoigwe said of the six units of 120 mw each originally installed at Sapele power station, only one remains available and can generate or is available for a maximum of 90mw. He said, “The Egbin power plant installed about 30 years ago is the only plant that is still showing good signs with an initial installed capacity of 1,320mw it has managed to remain available for 1080mw as at today.
Uzoigwe said, “One of its six units went down some years ago loosing 220mw. That unit is now under repair and will be back in a short while. Though its mandatory routine maintenance schedule had not been followed, the plant has been better managed than most other plants in the federation.
Uzoigwe who decried recent vandalism of gas pipeline that affect supply to power generation said these and other challenges culminated in low reducing the nation’s power per person to about 17.6 watts. This, he said is lower than what is obtainable in many nations. For instance, he said the United States has 1,402 watts while Japan and Australia have 774watts and 1,114 watts respectively. He said, “If we represent the real consumable power when our output is 3,000mw, then our power per capita electricity consumption will come as low as about 14 watts, so very poor.
However, hope is not lost. For instance, the Federal Government have unshakable faith that the private investors would deliver on set goals and objectives at least for a reason. The background and capacity of the firms were examined in the processes that culminated to purchase of the companies. The Chairman of the National Council on Privatisation Technical Committee, Mr. Atedo Peterside said while announcing the emergence of preferred bidders that NCP decided to use the ATC&C method for the selection of core investors for distribution companies because ATC& C loss levels will provide Nigerian consumers and other stakeholders with specific parameters with which to measure the outcome of the power sector reform and privatisation.
They were subjected to consistency tests and divided into two categories: bids in which ATC&C loss reduction proposal is less than 50 per cent and those where it is 50 per cent or more. He said bidders in the second category were subjected to a further review. The investors also seem to be ready to address major issues that stare the sector in the face. For instance, the Chairman of West Power and Gas Limited, Mr. Charles Momoh said it will commit $250 million to strengthen its distribution capacity of Eko Electricity Distribution Company Plc. The company said it understand the challenges of the environment where it will operate and therefore has put together funds and technical back-up to provide excellent services.
He stated that the fund would not be enough to address all the problems but the management, with support of Zenith Bank would continue to seek for more funding arrangement to improve its services. Momoh said the money would be used to execute critical projects like transformer procurement, metering and cabling. He said, “Our strategy is to improve on the system, support the Megacity project of the Lagos state government. This will take time but we are committed to achieve our set goals because we know that no economic growth will take place without adequate power supply.
Many observers are waiting to see how the investors would confront the challenges in order to deliver adequate and sustainable electricity to consumers in different parts of the nation. The observers however believe there is a great need for major stakeholders, especially the Federal Government to maintain effective regulation and enabling environment, including adequate security, capable of driving sustainable and profitable operations.
November’s wave of privatisation has also paved the way for investors to participate further in the development of the power sector, with 10 additional stateowned gas-fired power plants with a combined capacity of 4775 mw set to be sold off by the end of 2014. The country is looking to boost the share of gas in its generation mix, to benefit from its substantial reserves.
To ensure local power companies are able to sustainably tap local deposits, however, reforms to the tariff structure may be needed. At present, the government offers a rate of $1 per million cu feet (mcf), which is expected to rise to $1.50 per mcf. Ensuring that the domestic market remains attractive could require the government to more than double its current offer to a figure nearer $3.
Improving Nigeria’s electricity supply will also necessitate investment in transmission infrastructure, which remains in state hands but is being managed by a Canadian firm, Manitoba Hydro International. The government has already raised $750m through a bond issue to help overhaul the network.
Other opportunities for foreign investors are emerging in plant construction, management, consultancy and equipment supply. The government is offering several incentives, including tax holidays and breaks, with a particular focus on the gas-fired sector, as it looks to tap investors. By offering operators attractive terms, it will be hoping to steer the privatisation process towards success. Given that the poor electricity supply has long been Nigeria’s Achilles heel, a successful privatisation process and subsequent boost in capacity may yield dramatic results for the economy as a whole.
[Udeme Akpan, National Mirror]